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bespokeinvest.typepad.com - 2/24/2009

The S&P 500's Incredibly Shrinking Market Cap

— bespokeinvest.typepad.com — In an earlier post on the declines that individual stocks in the S&P; 500 have seen over... the course of the index's six-day losing streak, we noted that because of their market caps, if they were being considered for inclusion into the index today, ... (more) The S&P 500's Incredibly Shrinking Market Cap

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S&P 500

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bespokeinvest.typepad.com - 2/25/2009

S&P 500 Now Down 52% From All-Time High

— bespokeinvest.typepad.com — There have now only been two periods in the history of the S&P; 500 where the index... declined more than 50% from an all-time high -- 1929 and now. In the first chart below, we highlight the percentage change from the S&P; 500's most recent all-time ... (more) S&P 500 Now Down 52% From All-Time High

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S&P 500

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money.cnn.com - 2/26/2009

Tracking the bear: How bad could it get? - Feb. 25, 2009

— money.cnn.com — NEW YORK (Fortune) -- Don't let Tuesday's rally fool you. While the Dow roared back more than... 236 points and the S&P 500 gained 4%, Monday's 12-year lows showed that this bear market may still grow bigger and meaner. To start the week, both the S&P ... (more) Tracking the bear: How bad could it get? - Feb. 25, 2009

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S&P 500

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Are S&P 500 Earnings Wrong?
Bespoke Investment Group — In an Op-Ed in this morning's Wall Street Journal , Jeremy Siegel argued that the earnings for the S&P 500 are understating actual earnings.  While his entire argument can be read here , his basic premise is that Standard and Poor's calculates earnings based on each company's total earnings without taking into account their weight in the index.  Siegal goes on to say that earnings should instead be calculated using each company's earnings times its weight. While the argument may sound convincing, it doesn't really make sense.  The S&P 500 is meant to represent the total ...

"The Science Seemed So Solid"
Random Roger — ... On a related note Professor Jeremy Siegel wrote an opinion piece in the Wall Street Journal making a case for calculating earnings for the S&P 500 by market cap as opposed to allowing the largest company losing $1 to have the same impact on the earnings as a $1 loss when it comes from the smallest company in the index. ...

Searching for the Bottom: Valuation
A Dash of Insight — ... Weighted earnings, suggested by Prof. Jeremy Siegel, who believes that the reported S&P earnings over-emphasize the smaller cap stocks. ...

Siegel on Stock Market Valuation
Greg Mankiw's Blog — A couple months ago UPenn economist Jeremy Siegel penned a Wall Street Journal op-ed on stock market valuation and problems in the standardly computed price-earnings ratio. When I first read it, I thought the arguments were not very persuasive. Now, in a ...

Is The S&P Valued Too Low?
Phil’s Stock World — ... On February 25 I published an op-ed piece in the ‘Wall Street Journal‘ entitled, "The S&P Gets Its Earnings Wrong." In that article I said that, although the S&P weights each individual’s stock by its market capitalization to compute the return on the S&P 500 Index, no such methodology is used to compute aggregate earnings of the index. ...

Jeremy Siegel's False Logic
Stefan Karlsson's blog — Jeremy Siegel has in two articles argued that the current methodology for determing the stock market P/E ratio is misleading, because profits and losses aren't weighted by the market value of the respective company. According to Siegel himself, he has convinced Robert Shiller of this argument, and Greg Mankiw says that he is increasingly convinced of it. In his first article, he doesn't provide any example of his methodology, but he does so in his second article: "My methodology would weight the $45 billion earned by Exxon Mobil by 95 percent ...